A law degree won’t necessarily lead to financial security. According to the National Law Journal, buying a house would require earning three times your law school tuition. The nation’s economic climate puts the stereotypical view of a legal career’s benefits on its head.
University of Louisville Louis D. Brandeis School of Law’s Jim Chen shared that reality in a paper titled, “A Degree of Practical Wisdom: The Ratio of Educational Debt to Income as a Basic Measurement of Law School Graduate’s Economic Viability.”
Chen pondered paying off a student loan as a law school graduate looks for home, in order to determine legal education financial viability. His research revealed many law students’ rose-colored glasses blind them to certain realities.
For instance, Chen said they obsess over law school alumni highest salaries—not starting salaries.
“There is obviously a lot more that goes into the decision to attend law school, but you look around the world right now and everyone is paying attention to debt-to-income ratios,” Chen said. “I wanted to offer some guidance to people contemplating law school.”
Earning three times their tuition only secures “adequate” income, Chen’s research found. That conclusion is only true, if one assumes students only borrow for their tuition and have no other debt. Chen used mortgage provider guidelines to make the determinations.
So, students paying $16,000 per year in tuition need to earn $48,000. Those who paid $32,000 would have to bring home $96,000, while lawyers who paid $48,000 would have to earn $144,000. Again, this would only ensure an adequate financial position.
Boosting their financial to “good” would require earning six times their tuition, according to Chen. That means lawyers who paid $16,000 per year in tuition would have bring home nearly $100,000, while those who paid $32,000 would need to earn nearly $200,000. And, those paying nearly $50,000 in tuition would have to earn $288,000.
Sustaining minimal financial viability requires new lawyers earn twice their annual tuition. With that said, the National Association of Law Placement notes new law graduates earn an average of $68,500. Chen said that’s enough for many new lawyers to afford both college loan and house payments.
Lenders, according to Chen, take a dim view of student loan debt that’s more than 8 to 12 percent of a potential borrower’s monthly income.
“I was trying to think of a simple way to capture some of the growing discomfort over the economics of the decision to attend law school,” he said. “At a bare minimum, you should not borrow so much money that you can’t afford a house.”